Singapore’s central bank surprised markets Thursday by easing its currency policy, as data showed the city-state’s manufacturing sector continued to cast a pall on economic activity.
The Monetary Authority of Singapore (MAS), which uses exchange rates to guide policy instead of interest rates like most of its global peers, said that growth in 2016 was expected to be weaker than previously estimated and that inflation was now likely to tick higher at much slower pace than anticipated.
In a statement, the MAS predicted weak external demand in the U.S., Europe and Japan, combined with China’s structural slowdown, will result in “below-potential” full-year growth for trade-reliant Singapore. Moreover, oil’s recent price crash could see a fall in exploration activities, which will hurt the transport and precision engineering sectors, the MAS warned.
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